How to increase restaurant sales and profit margin - Finsprout.com

The restaurant industry is competitive. But that should not stop you from getting a high-profit margin in the restaurant business. In this article, we share an effective strategy to increase restaurant sales and profit margin.

how to increase restaurant sales and profit margin

How to increase restaurant sales and profit margin :

Bring uniqueness:

You should have at least 3-4 unique items in your restaurant menu. By using uniqueness, you can charge a higher price and increase profit. Make sure about the quality of the item. You should first launch the pivot item before investing a huge amount in it.

Claim GST on purchase: I have seen it many times. Restaurant owners are not aware of how GST works. You should claim GST / Sales tax amount for every claimable purchase. You can get the help of a qualified accountant to guide you.

Reduce employee turnover rate: Finding and keeping good employees in a business is the key to any successful business. As a restaurant business owner, you should not ignore employee wellbeing. You surely can reduce your cost by cutting the pay of your employee for an unreasonable reason. On another side, you have to overpay on employee training due to the high employee turnover rate. By keeping employees long time in your organization, you develop a connection between employees and business. If you treat the employee well, the employee will treat the customers well and vice versa.

Keep an eye on food wastage: Food wastage is not only harmful to your restaurant but a real problem to the whole economy. You have to reduce food wastage in your restaurant kitchen. Advise your chef to implement a strict policy of food measurement. Everything should be measured and used correctly while cooking.

Spot the hot selling food item: Get the benefit of your hot selling food item. Keep checking your sales number and POS number for it. Promote the hot item heavily to improve your sales and beat the competition.

Maximize the use of delivery apps: In modern times, food delivery apps perform a big role in restaurant success. Food apps can be your real friend during this tough time of Covid19. People prefer to order food at home and you should leverage this opportunity. Don’t forget to keep an eye on the performance of delivery apps.

Choose the best POS system:

A good POS system is the backbone of the restaurant. There are plenty of options available in the market such as Toast Pos, lightspeed Pos, Shopkeep, Square, Epos now.

The restaurant software should have below features :

  • Cloud-based POS
  • Solid data encryption
  • Custom access control
  • Easy to use and navigate
  • Best customer experience
  • Easy to make payment
  • Generates helpful reports
  • Inventory management
  • Operating speed

Keep your supply cost low: As a restaurant owner, you are purchasing food supply in good quantity. Don’t forget to negotiate for a discount and the best rate. This habit will reduce your cost of goods sold in long run and increase the restaurant profitability. Read our post on the income statement to get an understanding of business profit.

Outsource processes:

Doing all restaurant tasks in-house brings a huge burden on payroll and decrease your profit. Additionally, hiring and training employees is costly and time-consuming.

As a good option, you can outsource processes to cut the cost and increase the productivity of your employees. Common tasks you can outsource are cleaning, marketing, bookkeeping, taxes, payroll, web design. Don’t hesitate to pay a bit more to the contractor for the high quality of service. This will help you building a good business relationship with the contractor and having a smooth business operation on a consistent basis. ( Outsourced bookkeeping function and save up to 40% in cost ).

Buy second hand equipment:

I was not interested in buying anything second hand. Then I started my own business. Gradually I understood the value of cash flow. I saved money by buying second-hand tools and equipment.

You can easily cut the cost of kitchen equipment by buying second-hand equipment. You should consider two things while buying second-hand equipment. One is the quality check of equipment. Another thing is a money-back guarantee. Many websites are selling second-hand equipment.

Sell related items:

No matter what is the business, profit can be increased by increasing the average order value. You can implement upselling or down selling in your restaurant menu. Remember the waiter who insists on a few additional items to try while you order at a restaurant. That is upselling!

Upselling and down selling is a trend in online food delivery apps. Your focus should be to find the menu item which can be sold like hot as upselling.

Upselling can also be done using bundling. Bundle 2-3 items together and give it a good name. And here you go!

Expand gradually:

We all love fast-growing businesses. It is tempting to make a big plan to expand the restaurant business. However, you should gradually expand your restaurant business.

You can grow your business by opening a branch at a new location or adding more items to your menu. Joining additional food delivery apps is also an option.

Consider below points while growing your business:

  • Do BEP analysis of expansion
  • Use pivot model in growth to avoid the huge loss
  • Leverage employee spare time
  • Give priority to quality overgrowth
  • Consider partnering option while growing

Implement reward system:

I used to order food frequently when I receive reward points or coupon codes from the restaurant. The Reward system is based on the phycological principle of reciprocity.

It is a win-win situation for customers and restaurants. The restaurant gets more sales and customer gets quality items at low cost.

You can give a reward in different ways. It may be such as coupons, deals, giveaways, gifts, reward points. First, you can find the cost of the rewards. Then you can implement the reward marketing campaign.

Provide the best customer experience:

Your work is not ended by getting customers. Your end goal should be keeping the customer.

You can surely give importance to branding and restaurant interior. However, you should never ignore the quality of food.

The best customer experience is the combination of high-quality foods, the best customer service and an eye-catching environment.

Host events:

Hosting events is a popular way to boost branding. However, you need to change the method of the event during this covid19 pandemic. You can host an online event or event with strict social distancing. The alternative method is to partner with an event company. The latter method is easier and time-effective.

Partnering :

You cant grow alone. You have to grow together. It applies to personal and professional life.

Partnering is the optimal way to boost sales. You can partner with online food suppliers, hotels, event organizations, marriage organizations, government organizations or corporates to supply the food.

Hire good marketing agency:

I know you might say, ” I don’t want marketing service. I market my business myself. ”

It is our illusion that an entrepreneur can do everything. Marketing is a skill. You cant master it overnight. As an option, you can hire a good marketing agency and leverage its skill to boost your restaurant sales.

Wrap up:

The operating restaurant business is hard work. You can get the reward after few years. I hope you find this post on how to increase restaurant sales insightful. Please share this post on social media to inspire me to write more.

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